To avoid all identity theft problems we need to do away with all on line, give me this or that bit of your public life to verify it's you.
All these require some form of physical presents.
One solution would be local 'kiosks' to issue a digitally signed certificates, for specific reason, after physical verification of identity. Technology exists, (chain of trust or whatever they use for digital currency). Services paid by whoever requested this verification. In a way it would be a kin Public Notary service in 21 century.
Yes it would be less convenient, but so much safer. Probably a problem for all living out in da boonies...
There are activities that do not accept on-line verification, some I can think of:
5) Home appraisal (requires physical inspection by certified agent)
6) Public Notary
If we made all CC etc. be by statue responsible for all damages caused be identity fraud, they would have come with solution. Now, they just do not care.